Inner Mongolia Yuan Xing Energy (SZSE:000683) shareholders have earned a 22% CAGR over the last five years

When you buy a stock there is always a possibility that it could drop 100%. But when you pick a company that is really flourishing, you can make more than 100%. One great example is Inner Mongolia Yuan Xing Energy Company Limited (SZSE:000683) which saw its share price drive 153% higher over five years. Meanwhile the share price is 2.0% higher than it was a week ago.

Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.

See our latest analysis for Inner Mongolia Yuan Xing Energy

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During five years of share price growth, Inner Mongolia Yuan Xing Energy achieved compound earnings per share (EPS) growth of 13% per year. This EPS growth is lower than the 20% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Dive deeper into Inner Mongolia Yuan Xing Energy's key metrics by checking this interactive graph of Inner Mongolia Yuan Xing Energy's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Inner Mongolia Yuan Xing Energy the TSR over the last 5 years was 172%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Inner Mongolia Yuan Xing Energy shareholders are up 7.5% for the year (even including dividends). But that was short of the market average. On the bright side, the longer term returns (running at about 22% a year, over half a decade) look better. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Inner Mongolia Yuan Xing Energy has 3 warning signs we think you should be aware of.

Of course Inner Mongolia Yuan Xing Energy may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.